PHILOSOPHY – Rational Choice Theory: What are Public Goods? [HD]

(intro music) Hi! My name’s Jonny Anomaly, and I teach
at Duke University and UNC Chapel Hill. Today, I’m going to talk
about public goods. Consider the following case. In representative governments around the
world, citizens are periodically called on to vote for parties or candidates. In large elections, many people choose
not to vote. But among those who do vote, each faces the choice of how much time
to spend gathering and processing information about the candidates. Since each person’s vote is unlikely
to make a difference to the outcome of an election, and everyone knows this, there’s little
benefit to voters of trying to overcome bias or increase general knowledge
about the relevant issues. The expected benefits of gathering and
processing information are diffuse, but the cost is concentrated on the individual who has forego other
way of spending his time. In other words, informed voting is a
public good in democratic societies. Goods are public when they
exhibit two properties: nonrivalry and nonexcludability. Nonrivalry exists when one person’s
consumption of a good doesn’t diminish other people’s opportunities
for consumption, and nonexcludability exists when nobody can be excluded from consuming
a good once it is produced. Ordinary goods that we
purchase in a market are private, in the sense that once we own
them, we can do what please with them, within the limits of the law. For example, when i buy a surfboard, I could choose to ride it, keep
it stored in my closet, or sell it to the highest bidder. But since public goods are available
for everyone to consume, it is difficult to get people to
voluntarily provide them or conserve them once they’ve been provided. When I cast an informed
vote for a candidate, I make that candidate just a
tiny bit more likely to win, but the legislative consequences of the candidate’s victory are
shared by all citizens and potentially people in other
countries and future generations. Because, for many people, it is
psychologically costly to invest energy engaging in serious research rather than
idle gossip about the candidates and issues at stake in an election, the public good of informed,
unbiased voters is undersupplied. They are two separate impediments to the
voluntary provision of public goods: the free rider problem and
the assurance problem. Free riders are people who
seek the benefits of a good, but who try to avoid paying for it. Other people face the assurance problem, which occurs when people are willing to
pay for a public good but are unsure that enough others will contribute
to make their effort worthwhile. one way to solve the assurance
problem is by introducing altruistic punishment, which occurs when people are permitted to
punish free riders. The prospect of altruistic punishment
can help increase contributions to public goods especially well for small
groups in which people can bear retribution for being identified
as a free rider. Assurance contracts are another way
of producing local public goods. Consider Kickstarter, an internet company
that allows people to contribute to an outcome that everybody in a group wants, but which doesn’t collect contributions
until enough people donate to reach the threshold needed to fund the good. For example, we might use Kickstarter to
fund a tennis court at a park that many people in a neighborhood visit. Public goods that are global and
intergenerational, though, are much more difficult
to provide or preserve. Antibiotics are an example
of a powerful drug whose efficacy declines as their use increases, especially when they’re used
at subtherapeutic doses or misused to treat infections that
they lack the power to cure. Preserving the power of antibiotics
to cure infections is a public good because effective antibiotics are a
nonrival, nonexcludable resource whose benefits spill across borders
and across generations. Assurance contracts are
useless for cases like this, because the transaction costs associated with bargaining between billions
of people are too high. So we need more subtle ways of preserving
public goods like antibiotics. One way to approach the problem is to
convert public goods into private goods by increasing the extent to which each consumer internalizes the benefits
and costs of using antibiotics. For example, someone suggested that user fees should be applied to the
consumption of antibiotics, with the revenue being used to fund
basic science research that will stimulate the development
of new vaccines, new kinds of antibiotics, and technology
for diagnosing infections. It is worth distinguishing a
related set of principles. The problems of producing public goods,
solving collective action problems, and avoiding commons tragedies
are often similar in structure, and many introductory textbooks diagram
all three problems as prisoner’s dilemmas. But this isn’t quite right. In a true prisoner’s dilemma, the
non-cooperative action is always taken, since a prisoner’s dilemma is defined
as a non-cooperative game with a unique Pareto dominated
Nash equilibrium. In other words, in a true
prisoner’s dilemma, cooperation is never
the rational move. But in public goods games, rational
people often contribute. I want to end with a question: if wifi is a public good, why is
it being privately provided? Subtitles by the community

Maurice Vega

11 Responses

  1. Altruistic freedom writer punishment assured. 😉
    Evidence based school. Of experiencism… A therapy. Then to the common good

  2. Thwm lectures, speeches N teaches to applied as so…
    Social status n the gen real apprecistion of evaluation qualities so properties them…. That has led to major social injustice.
    … Try next one yourselfvees

  3. Wifi is being provided as a public good by private sources because it increases demand for other products where it is made available. Basically I willing to pay an extra buck for coffee to get hassle-free wifi.

    And because wifi is cheap (it has a near 0 margin cost) and provided widely enough (if the wifi is a little slow, I can just go else where), its consumption can reach a satiation or near satiation point by consumers, and the cost of free riders is nearly nil to the producer and the other consumers.

  4. I wanted to watch, but the minute I saw the whole thing was going to be that awful illustration the whole time I had to stop.

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